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Inner-chamber of Parliament House
Inner-chamber of Parliament House

Parliament raises concerns over tax exempted equipment

The Parliamentary Select Committee on Finance has expressed its displeasure about the inability of the state to track many of the equipment and materials that come into the country under tax exemption after the relevant projects are completed.

It has ,therefore, directed the Ministry of Finance and the Ghana Revenue Authority to put measures in place to track the equipment and vehicles that would be imported under subsequent waivers.

This is to ensure that the state becomes the residual beneficiary of such equipment and vehicles after the projects for which they are imported are completed.

This was contained in its report on the request for a tax waiver amounting to US$92.40 million on the direct Energy Performance Certificate (EPC) cost in respect of the 400MW combined Cycle Gas Turbine power plant in Tema which is being constructed by Early Power Limited.

Some members of the Committee also expressed concern about the numerous tax waivers that the country had granted and wondered if they had made the country better or worse off.

To this,a Deputy Minister of Finance, Mr Kwaku Kwarteng, who appeared before the committee, explained that with the support of the Department for International Development (DFID), the government was auditing the various tax exemptions and waivers granted to help establish the true cost/benefit of these exemptions.
He said a consultant was in the process of being procured to help with the audit.

400MW power facility

The Bridge Power Project was established for the rapid redeployment of a 400MW power generating facility located in Tema.The Early Power Limited (EPL) was established as a special purpose vehicle to own and operate the power plant.

Subsequently, the EPL and the Electricity Company of Ghana (ECG) executed a power purchase agreement in September 2016 under which the EPL agreed to supply the ECG with up to 400MW of electrical power and energy, and also cooperate on other aspects of the project.

Further to the agreement approved by Parliament, Cabinet granted approval for the request for waiver of specified taxes associated with the project.

Observations

The committee observed that the project was in line with the government’s objective of increasing total installed generating capacity and increasing private investments in power generation, as well as increasing thermal generation in the energy mix.

It was noted that the implementation of the 400MW bridge power project by the EPL would help the country to meet the demand for electricity, while further reducing the dependency on hydropower.
The committee was also informed that the 400MW combined cycle gas turbine plant would come with relatively lower operating costs which will ultimately benefit the Ghanaian consumer in the form of a relatively lower tariff.

It also observed that the site for the plant is in close proximity to the Tema Oil Refinery (TOR) and other public and privately owned generation facilities, thus facilitating interconnection and power evacuation with the benefit of an existing LPG import and power evacuation infrastructure.

 

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